Guidelines for an Allowance

Be consistent. Set a day to give the allowance. Agree upon the amount and the limits for spending. Try an allowance contract that both child and parent(s) sign.
Children need to be able to spend some money however they wish. They need to practice making their own decisions.
Don’t come to the rescue every time your child runs out of money. If your child is ever going to learn how to manage money, s/he must face the consequences of their own spending mistakes.
Money is not generally effective as a reward or punishment. Children who are given money for things like good grades, thoughtfulness, or helping at home learn to put a monetary value on character and achievement. Positive behavior can be reinforced in other ways. A special outing together or an expression of appreciation for a job well done often means more to children than a financial bonus.
The purpose of an allowance is to begin to shift some of the responsibility for goal setting, planning, implementing plans, and making choices for your child. A small investment of time and energy while the child is young can have big payoffs later.
Guide and advise your children’s money decisions rather than direct and dictate. Encourage and praise rather than criticize and rebuke. Doing so will help develop confidence in their own ability.
Remember that your children will differ. Respect their individuality. Avoid making comparisons with siblings or other children.
Be patient. It takes children time to learn to manage money and develop financial responsibility. Frequent references to their mistakes should be avoided; they usually are already aware of them. Overreacting to mistakes with money leads children to believe that money is more important than it should be.

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